How to choose investments as a beginner

1. Start with what the money is for

An investment is only suitable if it fits your goal, timeframe and ability to cope with a fall.

2. Decide between funds and individual shares

A fund spreads your money across many investments at once; a single share ties your result to one company.

3. Understand the business before the share price

If you cannot explain in two sentences what a company sells and who pays for it, keep researching before buying.

4. Ask five questions about any company

Mesodian groups the important checks into five plain questions, each matching one of its five core scores.

• Quality — how strong and financially healthy is the company?
• Growth — is the business growing, and is that growth expected to continue?
• Value — do the shares look expensive or cheap for what the company offers?
• Sentiment — how positive or negative do analysts and investors feel?
• Risk — how likely is the investment to face problems or sharp falls?

5. Know the common investing approaches

Dividend, growth, value and diversified investing are different ways of balancing income, growth and risk.

• Dividend investing focuses on companies that pay regular income — payments can be cut.
• Growth investing looks for fast-growing businesses — prices can fall sharply if growth slows.
• Value investing looks for companies priced below what they seem worth — cheap shares can stay cheap.
• Diversified investing spreads money widely, often through funds, to reduce dependence on any one result.

6. Watch for red flags

Promises of guaranteed or very fast returns, pressure to act now and tips you cannot verify are warning signs.